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The sale of local phone operations in Hawaii helped Verizon Communications, the largest US telecommunications group, report an18 per cent increase in second-quarter earnings.

Excluding one-time items, however, the New Jersey-based group's earnings were flat, with strong growth at Verizon Wireless offsetting higher than expected line losses in Verizon's traditional telephone business.

The accelerating line losses reflected the competitive threat as customers switch to wireless lines or competing services including internet telephony.

To counter that threat Verizon has increased capital spending on its wireless service and the fibre-optic network it is building to deliver advanced services including video in competition with the cable TV network operators.

Net income of $2.11bn,or 75 cents per share,compared with $1.8bn, or 64 cents, in the year-ago period. Excluding a $336m gain on the sale of the Hawaii operations and other one-time items, Verizon said it earned $1.77bn or 63 cents. Verizon sold its Hawaiian unit to the Carlyle group for $1.65bn in the quarter.

Revenues increased4.6 per cent to $18.6bn,the slowest growth in fivequarters, but were buoyed by the strength of Verizon Wireless, Verizon's joint venture with the UK's Vodafone group that added a record net 1.9m customers during the quarter, 25 per cent more than in the same period a year earlier.

Customer turnover atVerizon Wireless fell to 1.22 per cent, among the lowest rates in the US wireless industry, but average monthly revenue per user also fell 3 per cent to $49.42 reflecting the introduction of lower-priced family plans and other wireless service “bundles”.

Verizon's fixed-line phone business continued to feel the impact of the dramatic changes reshaping the telecoms industry. Verizon lost 518,000 consumer telephone lines.

Verizon increased itscapital spending in thequarter by 28 per cent to$4.06bn and raised its forecast for the full year by roughly $650m to about $15.3bn.